Australia’s overseas mining operations – a “hard” regulatory role for the Australian Government in Mongolia

In early July, Oyu Tolgoi, the $6.6 billion Rio Tinto project, shipped the first of the 40,000 tonnes of copper concentrate out of the enormous South Gobi desert mine in Mongolia. Oyu Tolgoi, managed by Rio Tinto, is Mongolia’s largest mining project – and one of the “world’s largest underdeveloped copper-gold resources’”, which is expected to operate for 50 years. Rio Tinto, which holds a 66% shareholding in Oyu Tolgoi, is listed on the Australian Securities Exchange and has its executive offices in Melbourne.

While the previous stalemate between the mining company and the Mongolian Government has focused on exacting Mongolia’s costs and financing, ascertaining their likely slice of the pie, little attention has focused on the potential human rights impacts on local communities.

Without delving into the debate about sustainable mining, I wish to highlight some of the reasons why it is important that the Australian Government play a monitoring role in ensuring Australia’s involvement in Mongolia and elsewhere does no harm to local communities. This is particularly important given Mongolia’s less than perfect human rights record and poor regulatory framework when it comes to mining and human rights.

Mongolia and mining – human rights violations and corruption

The mining sector is a major contributor to the Mongolian economy, and has been since the country’s transition to a market economy. Despite its significant economic progress, Mongolia is still in its infancy in terms of human rights and democracy. Despite the focus on developing the mining sector in the last ten years, the government has overlooked the rights of nomadic herders, and failed to integrate their protection into a development framework. Furthermore, corruption remains a threat to sustainable development, which raises the question of whether mining revenue will trickle down to those who need it most.

Mineral licenses today cover approximately 22.3 million hectares of Mongolian land. This constitutes a significant threat to Mongolian traditional nomadic herders who will not be able to continue to graze their livestock over land once mining operations commence in their local areas.

The threat to Mongolian culture has been recently discussed by the Mongolian Chief Human Rights Commissioner, Mr. Byambadorj Jamsran at an international conference on mining and human rights, attended by Australian civil society representatives and Rio Tinto. Commissioner Byambadorj spoke of the decrease in nomadic herders in three “soum” regional areas, from 3,029 in 2004 to just 1,352 in 2011. Many of these herders resettled to regional centers due to shrinking pastoral land and the impossibility of continuing their traditional livelihoods alongside mining. Many others were involuntarily resettled.

It is especially difficult to protect Mongolia’s traditional nomadic culture and redress violations of cultural rights because the Mongolian Government does not itself consider traditional ways of life as falling under the category of “culture”, as defined by the International Covenant on Economic, Social and Cultural Rights, and by the Committee on Economic, Social and Cultural Rights, general comment 21. Traditional herders are not considered indigenous peoples, nor are any other group in Mongolia, despite their continued connection with the land and their traditional way of life. Mongolians prefer to consider themselves as a homogenous population, with culture defined more in terms of art and history, and less about their traditional way of living.

In addition to the loss of culture, mining has had far reaching human rights implications. These are not limited to the environmental damage that has resulted in the contamination of air and water sources. It also includes health and social impacts as populations migrate to ill-equipped urban centres. These urban centres are now seeing an increase in HIV-AIDs, respiratory illnesses, and sexually transmitted diseases as well as domestic violence.

When an Australian company is operating in a developing country with a history of corruption, environmental and human rights violations, our government must step up and play a more active role in ensuring transparency and respect for human rights.

Opt-in business and human rights framework inadequate

The challenge of business and human rights is nothing new, but it is becoming increasingly relevant as Australian owned multinationals become deeply intertwined in the global economy, especially in the extractive sector.

Of course foreign companies must abide by national laws, but what happens when the legal framework, particularly related to environment and human rights is poor and the enforcement of the law is inadequate in host nations?

Companies must be responsible for their activities, but so too should governments that headquarter the companies – especially those benefiting from mining revenue. Australia should not only ensure that its companies are operating responsibly overseas, but also that they are abiding by international laws and best practices. The duty of the state to protect against human rights abuses by third parties, including businesses is a key pillar of the UN “Protect, Respect and Remedy”’ Framework, drafted in 2008 by the Special Representative of the UN Secretary General on Business and Human Rights, John Ruggie.

When an Australian company is operating in a developing country with a history of corruption, environmental and human rights violations, our government must step up and play a more active role in ensuring transparency and respect for human rights. It is not enough to leave it up to companies to self-regulate. We know that doesn’t work – just take a look at Australia’s experience in Bougainville. We also know that a glossy corporate social responsibility brochure is not a guarantee of practices that respect human rights abroad.

So far Rio Tinto has demonstrated an awareness of the risks to the human rights of local communities in mining-affected areas in Mongolia, having released its environmental and social impact assessment, which was met with a mixed response. While we are only beginning to see how Oyu Tolgoi will impact the human rights of local communities, the length and size of the mining project calls for a significant level of transparency and oversight to ensure the human rights risks identified are appropriately managed. As a significant recipient of Mongolia’s mining wealth, Australia also has a significant monitoring role to play in Mongolia, as it does in many other parts of the world. Ultimately we are all responsible for the activities of Australian companies overseas, whether we are shareholders, or simply citizens.

On the 20th of May 2013 Australian’s international development scrutineer Aid/Watch and Friends of the Earth Sydney supporters gathered in protest outside the Sydney Masonic Centre at 66 Goulburn Street, protesting the Mining for Development Conference under the AMDI funded by AusAID . Without protestors bringing media attention to it, of which the author was involved, this controversial, $127 million dollar program facilitating ‘mining aid’ promoted as ‘sustainable development’, may well have slipped past public awareness unnoticed .
Some 600 delegates from 69 developing nations where flown into Sydney, including delegates from; PNG, Afghanistan, Mongolia, Mozambique, and Ethiopia to name a few . They were met by Australian and British government agents and representatives from mining companies including BHP Billiton, Rio Tinto and Anglo American . Organised by the Perth based International Mining for Development Centre (IM4DC) its function is to promote mining industry training to delegates from host Nations while setting up extractive industries in developing countries as an alternative to foreign ‘aid’ .
Permanent Secretary of the Department for International Development, United Kingdom, Mr Mark Lowcock describes the AMDI like this; “With soaring global demand and ever better technology, extractives can be a much bigger part of the development story for more of the poorest countries than has been previously considered” .
Former Parliamentary Secretary to the Prime Minister, Dr Andrew Leigh describes the AMDI this way; “Australia has an obligation to share its mining experience with developing nations. If developing countries can benefit from their minerals then the payoff will dwarf anything we might hope to deliver through foreign aid ”

a) Defining the important ethical issues surrounding the Australian Mining for Development Initiative (AMDI).
The important ethical dilemma presented here is Australian mining legacies .Clearly ‘Australia’s mining experience’ has left atrocious legacies abroad as well . From dozens of appalling examples documented worldwide there is not [one] documented example of Australian mining companies successfully delivering the purported benefits they claim to deliver to developing nations . To the contrary, two inexcusable ‘mining experiences’ close to home include; firstly ‘aiding and abetting war crimes’ against Bougainville’s Indigenous population, up to 20,000 died, while trying to force the reopening of Con-zinc Rio Tinto Australia’s Panguna Copper & Gold mine . Second, the continuing ecocide in the Fly River PNG left by Australia’s BHP Billiton’s Ok Tedi Copper & Gold mine, the effects of which run into damaging Australia’s Great Barrier Reef .
Clearly important ethical issues are defined by questions such as;
Should mining be promoted as sustainable development?
Ought Australian tax proceeds to be used in providing indirect welfare or ‘aid’ to mining giants by way of free training, free promotion and extravagant conferences?
Total words for part a): 162
b) Identifying the facts relevant to analysis of the ethical issues surrounding the AMDI.
Surprising the fact that the World Bank questioned extractives last year, is profound, asking; ‘is there a natural resources curse?’ followed by a broad investigation across more than 200 regions the conclusion was [yes], ‘low-income countries dependant on mining suffer from a long-term resource curse’ . So while ‘in Washington the World Bank says mining is bad for development, in Sydney AusAID is promoting mining as the development cure-all’ .
Sustainable development as defined by Brundtland (WCED 1987) is; ‘development that meets the needs of the present without compromising the ability of future generations to meet their needs’ . Large scale extractives, I would argue, cannot fit alongside this definition. While present mineral consumption needs are met, there remains a non-renewable defecate for the needs of future generations. Minerals are a non-renewable resource. Mining and transforming minerals into something else cannot be sustained. The audacity of the University of Queensland to name its IM4DC partnership organisation ‘The Sustainable Minerals Institute’ constitutes a definitional farce. Renewable resources may be sustainable, non-renewables are not.
The AMDI tax funded budget of $127 million, is it being ethically spent? In the public interest Preston (2007) points out ‘parliamentarians and unelected public officials are entrusted with public money’ . Should it be reaching the fat stomachs of Rio Tinto/BHP mining executives, unelected public officials and economic rationalists? Or ought it to be fed into the bellies of developing nations by way of their own sustainable socio-cultural ecological initiatives such as securing domestic agricultural supply and environmental protection? Evidence suggests that significant amounts of the AMDI budget is being eaten by high rolling corporatists in the VIP ‘Australia Lounge’ at functions surrounding conferences and seminars like the co-hosted AusAID/World Bank African Mining Inbaba .
Greens Lee Rhiannon has uncovered a myriad of ethical issues in the AMDI scheme that are limited in this paper, however for further interests it is recommend reading the relevant senate questions here; http://lee-rhiannon.greensmps.org.au .
Total words for part b): 311
c) Appling act utilitarian ethical analysis to the AMDI.
Widespread discourse surrounding ethical political practice and decision making, relevant to the AMDI, uses act utilitarian analysis , in light of ‘the common good’ in what Preston simplistically interprets as ‘majoritarian’ in terms of ‘the greatest good for the greatest number’ . This involves analysing all possible consequences of political decisions concerned with the ethics of the AMDI. Analysis is structured in terms of (undesirable) verses (desirable) , yet ambiguity remains with relevance to whom. From this, assessment of whether net utility has risen or fallen as a result of examination is determined in the conclusion (e) with a resolution of whether the AMDI is an ethical program or not.
Undesirable
Environmental impacts;
Developed countries with increasingly strict environmental policies, like Australia, have serious trouble enforcing and mitigating the consequences of environmental impacts from mining , let alone developing nations lacking adequate policy on environmental projection. This has been recklessly taken advantage of, countless times, by multi-national mining companies, especially Australian miners in recent decades . Another consequential environmental impact that rates a mention is ‘sustainability’ .
Socio-cultural impacts;
Mining causes serious social impacts to cultural diversity in developing nations. Social impact assessment of resource projects [report] , like sustainability/environmental assessments in mining act as window dressing’s for Corporate Social Responsibility (CSR) and gravy trains for academics but do nothing in terms of mitigating social impacts . Franks the author mentions assessing cultural change cultural heritage cultural awareness and cultural facilities , however no mention of protecting socio-cultural diversity or any such nature, as an important undesirable impact.

Gender issues;
Issues around gender inequality and mal treatment of women as a consequence of mining in developing nations are recognised, even from the World Bank, as a significant problem . From lack of consultation with women to rape and prostitution, impacts are severe . Respect for women, women’s safety and inclusion of women in mining engagements is challenging .
Foreign procurement and foreign wealth diversion;
It is overwhelming undesirable for multi-national mining giants to procure and rake profits from the resources belonging to the sovereign wealth of peoples in developing nations . There are endless examples of foreign miners exploiting host nations in recent decades, where local benefits where as little as 1% , improving slightly to about 20% ownership , with one company boasting it shares up to 50% with its host , hardly a good deal at any rate. Surprisingly though many host delegates continue to sell-out generously despite being well informed .
Conflict and genocide;
Arguably the most serious consequence of mining developing countries is the divisive conflict, indignation, resignations , murders and all out war it causes nations. Again in light of numerable examples, human rights violations and genocide are a severe risk of mining .
Corruption of governance and sub-national governance;
Apparently mining magnates control and corrupt governments whether ‘developed’ or ‘developing ’ . Consequently a majority of mining nations do not meet satisfactory governing standards . An absurd, however sincere agenda from another gravy train academic at the M4D conference, is that sub-national governance is a good consequence of mining developing countries . This opinion was seriously questioned .
Desirable
Economic growth;
Admittedly economic growth is a desirable aspiration to many people in developing nations, coerced into mimicking developed nations. Whether positive growth comes as consequence of mining is yet to be properly determined. Limited evidence suggests it has minimal potential .

Alleviating poverty;
Affluence as a consequence of mining is debatable in Australia, especially by those living in poverty. Regardless, international delegates see mining development as a strategy to alleviate poverty .
Non-reliance on foreign aid;
Reliance on aid in developing nations is wrought with controversy . The idea that foreign mining can consequentially replace foreign aid is equally controversial . This transformation is desirable for many dignified by independence in developing nations , and no doubt a desirable consequence transforming aid donations into mining profits for Australia.
Development;
There is a link between mining development and the flow on of associated infrastructure such as energy and transport utilities, however emphasise on prevention of over-development has been expressed .
Local employment;
Consequential local employment, you would hope, is a desirable result that ought to be a CSR . However, due to a lack of skilled labour, miners, ostensibly constrained by time and money, do not necessarily employ local host communities .
Total words for part c) excluding sub headings: 657
d) Applying Kantian categorical imperative rule to the AMDI ethical analysis.
The defining rule authorising mining as a development initiative abroad is centred on further stimulating economic growth and affluence, non- consequential to the beneficiaries, so bugger everyone else . Economic instrumentalism , in the AMDI context, is modelled on the ostensible success of mining in Australia. If it worked here it will work over there. The problem lies on whether mining is working or not. This is based on ‘cui bono’ ‘who benefits’? Or who, and what doesn’t. Does ecology benefit for example? Deontology cannot ignore ‘environmental ethics’ . The notion that mining is good development, in an absolutist context, is derived from anthropocentrism . With regard to the AMDI, the altruist rule they are using is; Australia mines so it must be good for Australia to help developing nations to do the same. Their categorical imperative is fundamentally flawed in that if all nations mined the way Australian miners continue to do, the diversity of life as we know it would be more severely compromised and threatened than it already is. Without a doubt this is unsustainable.
Just as an economic rationalist can attempt to mould a categorical imperative to justify; morally mining another nation’s resources, were capital is not necessarily universally relied upon , hence not universally applicable. So can, a cultural relativist , ecological rationalist , or eco-centrist , dissolve such rhetoric in place of absolute moral rationale. This new categorical imperative; that mining inevitably destroys the life support systems of planet earth, ‘the biosphere’ . This rule can be universally applied in that all life, including the economic rationalists, miners and even fascists, rely on those systems to sustain life, unlike capital . Applied in the context of mining eating away at mother earth’s ‘life support systems’ like a cancer, also linked to cancer , the ‘golden rule’ , do unto your planet as you would have your planet do unto you, is profound, free of contradiction and inarguably universally absolute. The assertion that ‘Mining is not development’ or ‘mining is bad development’ is supported by Kant’s universally autonomous principle outright respect’ for persons in this case ‘mother earth’, with the rule; ‘always an end and never a means only ’ . The ‘end’ being the absolute non-consequential truth; ‘mining is universally unethical’ while the ‘means only’ being; the consequential entropy of mining.
Total words for part d): 373

e) Ethical Conclusion.
In the utilitarian examination of whether net utility arose or fell as a result of ethical analysis, the conclusion reached was; that net utility; ‘ the greatest good for the greatest number’, the ‘desirable’ consequences of mining for development fell further than expected upon thorough analysis. In other words the negative consequences of mining for development outweighed the positives. This determination was made on the basis that even amongst the selected pro-development delegates, expressions of ‘undesirable’ consequences outweighed ‘desirables’. Had entire populations in developing nations been consulted concerning the ‘undesirables’ vs. the ‘desirables’ it is estimated that ‘desirables’ may have dropped off the page with the quantity of ‘undesirable’ consequences mining their countries could entail with the AMDI. This result could have been expressed more clearly without limitation to the length of analysis due to the richness of the research sources, however it does provide six points of undesirable consequence over five points of desirable mining for development.
In comparing this utilitarian analysis result with the Kantian categorical imperative ruling the conclusion has been reached that both ethical theories are somewhat malleable, with strengths and weaknesses, and despite the idealism of neutrality both can be manipulated to suit the ethics of the analytical researcher. Especially utilitarianism, for example; ‘is it possible to identify, know and calculate all the positive and negative consequences’ of mining in developing countries? The weakness of Kantianism hinges on the level of rational or perhaps irrational debate, and whether there is a median of ‘common sense’ somewhere in between. For example the Kantian analysis provided hinges between the ethical relativism of ‘economic rationalism vs. ecological rationalism. The absolute conclusion of which is ultimately ethical, is dependent on the context of reasoning duties; prima facie duties , values, even bias, again of the analyser and how cleverly they can manipulate and persuade a rule with either hypothetical logic, purported facts or both.
That said the conclusion that the AMDI and large extractive industries in general are unethical is synonymous with my own conscience on the issue. Not to mention the squandering of public entrusted money eaten by World Bank mining seminars and conferences and extracted into community development based mining inspector salaries for delegates who ought to be paid by the mining companies, and the list goes on . If I thought mining was ethical sustainable development, I would be working as an AMDI consultant. I wouldn’t be researching Indigenous studies and applied ethics and sustainability. Although I see myself as an eco-centric culturally relative anarchist generally, when it comes to my conscience concerning mining I have no trouble taking an absolute position. Dead set against it.
Total words in part e): 438
*Authors note: This paper repeatedly contains the words; ‘developing nations’ and ‘developing countries’ as a compromise for the purpose of legibility, however it must be noted that offence is taken to such paternalistic and derogatory terms used to describe diverse peoples, customs, cultures and lands that are no more or less ‘developed’ than any other, just different.